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EXHIBIT 99.1
Description of Slides Regarding the Company's Presentation at the Salomon Smith
Barney Entertainment Media and Telecommunications Conference in Arizona on
January 8, 2001.
Slide 01
Large McLeodUSA logo.
Slide 02
The Telecommunications Landscape. . .
. Incumbents
. Competitive Providers
. McLeodUSA
McLeodUSA logo. . . . is changing rapidly
Slide 03
Our View . . .
. Opportunity
. Plan
. Execution
McLeodUSA logo. . . . is unchanged
Slide 04
Framing Our View . . .
Sustainable
Levered
Assets
McLeodUSA logo. . . . value creation
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Slide 05
Core Components . . .
[Three circles overlapping in part each of the other two circles. The text
"People" is printed in the top circle; the text "Capital" is printed in the
lower right circle; the text "'Execution" is printed in the lower left circle;
and the text "Sustainable Levered Assets" is printed in the center of where the
three circles overlap.]
McLeodUSA logo. . . . keys to success
Slide 06
Management Strength . . .
[Centered on the slide is a photograph of Roy Wilkens, Clark McLeod and Steve
Gray.]
McLeodUSA logo. . . . proven leadership, proven execution
Slide 07
Large McLeodUSA logo.
Steve Gray
Slide 08
2000 Key Accomplishments. . .
. People
. Assets
. Execution
McLeodUSA logo. . . . remain our priorities in 2001
Slide 09
Our Progress. . .
1999 2000E
---- -----
People 8,100 10,500
Revenue $909 million $1.395B
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EBITDA $59 million $60 million*
Route Miles 10,036 24,500
Lines 679K 1.080M
Directories 19 million 27 million
*Includes $55M negative EBITDA from Splitrock Acquisition
McLeodUSA logo. . . . is substantial
Slide 10
Customer Focused. . .
[On the left two-thirds of the slide appears a map of the continental United
States, showing the 48 states therein. The two letter postal state abbreviation
symbols "WA," "OR," "ID," "MT," "WY," "UT," "CO," "AZ," "NM," "TX," "OK," "KS,"
"NE," "SD," "ND," "MN," "WI," "IA," "MO," "AR," "LA," "IL," "IN," "OH," "MI,"
appear within the respective boundaries of the state which each symbol
represents. These states are colored yellow. The remaining states are colored
gray. The following numerical percentages appear within the following states:
Idaho "3%"; Utah "5%" (representing Salt Lake City); Wyoming "37%"; Colorado
"18%"; North Dakota "34%"; South Dakota "35%"; Nebraska "7%"; Minnesota "28%";
Iowa "46%"; Missouri "10%"; Wisconsin "21%"; Illinois "32%"; Michigan "15%";
Indiana "10%" (representing Indianapolis). There is a black-outlined star
representing Indianapolis, IN and Salt Lake City, UT. The following states have
green stars representing locations of our sales offices: WA, OR, AZ, NM, TX, OK,
KS, AR, LA, OH. Text centered above the map "Local Business Lines". Text to
the lower left of the map "(STAR)Indianapolis, IN, Salt Lake City, UT, and %
Excludes Tier 1 Cities". Text to the lower right of the map "Illustration Only".
To the right of the diagram is the following text:]
. Brand
. Product / Distribution
. Network / Systems
McLeodUSA logo. . . number #1, most admired
Slide 11
Brand, Perpetual Catalog . . .
[Centered on the slide is a map of the continental United States, showing the 48
states therein. The two letter postal state abbreviation symbols "OR," "CA,"
"NV," "ID," "MT," "WY," "UT," "CO," "OK," "KS," "NE," "SD," "ND," "MN," "WI,"
"IA," "MO," "AR," "MS," "TN," "FL," "KY," "IL," "IN," "OH," "MI," appear within
the respective boundaries of the state which each symbol represents. There is
yellow shading in each of these states that have abbreviations with several
states fully shaded in yellow and others shaded in part. The yellow shading
represents
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areas covered by McLeodUSA directories. To the right of the diagram is the
following text: "51 Million People; 30 Million Directories" The text "415,000
Business Customers" is centered above the map. The text "Illustration Only" is
below the map.]
[To the left of the map and slightly overlapping the southwestern states of the
United States is a picture of the McLeodUSA directory open to a yellow page ad
with another large McLeodUSA directory and another small McLeodUSA directory
lying partially on top. The text "Paper/Electronic" is above this picture. The
text "www.mcleodusa.com" is below it.]
McLeodUSA logo. . . . 97% bus/res coverage
Slide 12
Product/Distribution. . .
[On the right two-thirds of the slide appears a partial map of the continental
United States, showing only the following states with the two letter postal
state abbreviation symbols appearing within the respective boundaries of the
state which each symbol represents: "WA," "OR," "ID," "MT," "WY," "UT," "CO,"
"AZ," "NM," "TX," "OK," "KS," "NE," "SD," "ND," "MN," "WI," "IA," "MO," "AR,"
"LA," "IL," "IN," "OH," "MI". There are green stars throughout these states
representing our sales offices. Text "Customer - 95% Bundled Product" is
centered above the map. To the right of the map is the text "136 Sales
Offices". Text "Illustration Only" is below the map.]
[On the left one-third of the slide is a green arrow pointing upwards. Text
"Sales Team" is below the arrow. Text "1450" represents the number of people on
our sales team in "2000" at the bottom of the arrow and the text "1850"
represents the number of people on our sales team in "2001" at the top of the
arrow. To the right of the arrow is the following text:]
Voice
-----
Local
Long Distance
Data
----
Internet
Intranet
Private Line
Web Hosting
E-Commerce
McLeodUSA logo. . . . proven to penetrate
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Slide 13
Data And Voice Infrastructure. . .
[Centered on the slide is a map of the continental United States, including
Alaska and Hawaii. On the map are circles representing location of our
data/voice switches across the United States. The text "440 Data/Voice
Switches" is centered above the map. The text "Illustration Only" is below the
map.
McLeodUSA logo. . . . 810 cities, 90% U.S. coverage
Slide 14
Network Extension. . .
[On the left two-thirds of the slide is a map of the continental United States
showing our fiber route miles, core sites, hub sites and network centers. The
text "32,500 Route Miles" is centered above the map. The text "Illustration
Only" is below the map. The text "75% Intercity, 25% Intracity, 475 Pops/Hubs
and *Level 3 Fiber Complete 1H2001" is to the right of the map. To the bottom
left of the map is a key designating a triangle for a core site, a circle for a
hub site, a black line for fiber route (with an "*"), and a triangle enclosed
with a circle for a network center.]
McLeodUSA logo. . . . one functional network
Slide 15
Customer and Network Systems . . .
[Four ovals are across the top portion of the slide with the following text in
each oval: "Sales/Provisioning", "Billing", "Accounting" and "Customer Care".
Immediately below the ovals are four boxes across the slide with the following
text in each box: "Sales/Provisioning Database", "Billing Database",
"Accounting Database" and "Customer Database". Immediately below the boxes are
two rectangles centered beneath the boxes with the following text in each
rectangle: "Free Form Data Feed" and "Systems Integrator -- Oracle, EDS".
Immediately below the rectangles is another rectangle centered beneath with the
following text: "NMS/Data Layer".]
McLeodUSA logo. . . . manage transactions
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Slide 16
M & A, Experienced, Successful. . .
[Merger and Acquisition timeline diagram, starting with the year 1996 continuing
through 2000 and showing corporate logos of business acquired. Telecom*USA
Publishing Company is shown in 1996, Consolidated Communications is shown in
1997, Dakota Telecommunications Group is shown in 1998, Ovation Communications
is shown in 1999, Access is shown in 1999, Splitrock is shown in 2000, and
CapRock is shown in 2000.]
McLeodUSA logo. . . . integrating, leveraging people and assets
Slide 17
Our Performance . . .
[On the top half of the slide are two bar graphs. On the left is one
representing "Revenue ($ Billions)". The year "99" shows "$0.9", the year "00
E" shows "$1.4" and the year "01 E" shows "$2.1". To the right is a bar graph
representing "EBITDA ($ Millions)". The year "99" shows "$59", the year "00 E"
shows "$115*", and the year "01 E" shows "$225". On the bottom half of the
slide are two more bar graphs. On the left is one representing "Total Lines
(Thousands)". The year "99" shows "679", the year "00 E" shows "1,080", and the
year "01 E" shows "1,600". To the right is a bar graph representing "Books
Distributed (Millions)". The year "99" shows "19", the year "00 E" shows "27",
and the year "01 E" shows "33". Below the graphs is the text "*Includes $55M
negative EBITDA from Splitrock Acquisition"]
McLeodUSA logo. . . . will continue
Slide 18
Priorities/Imperatives. . .
. People
. Invest wisely
. Data
. Core products
. Systems
McLeodUSA logo. . . . our focus for 2001
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Slide 19
Large McLeodUSA logo.
Lyle Patrick
Slide 20
Financial Cornerstones. . .
. Viability of business plan
. Funding status
. Predictability/reliability
McLeodUSA logo. . . . the foundation of our success
Slide 21
Cornerstone #1 . . .
A viable, replicable business plan
. market specific
. platform agnostic
. market profitability
. new market visibility
McLeodUSA logo. . . . create and sustain cash flow
Slide 22
Market Summary . . .
Total EBITDA Positive
Markets/Books Markets/Books
------------- -------------
1999 2000
---- ----
CLEC 30 14 18
Publishing 260 188 216
McLeodUSA logo. . . . impressive and improving
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Slide 23
Local Base, Allows for Bundling and . . .
[Centered on the slide are two pie charts side by side. On the left is a pie
chart representing "80% Competitive Telecom", "15% Publishing"; "4% Local
Exchange" and "1% Other". Above the pie chart is the text "Revenue $2.1B". On
the right is a pie chart representing "59% Competitive Telecom", "27%
Publishing", and "14% Local Exchange". Above the pie chart is the text "EBITDA
$225M". Centered above both pie charts is the text "2001E".]
McLeodUSA logo. . . . revenue stream quality
Slide 24
Factors Affecting 2001 . . .
. ISP Revenues
. Local Revenue Per Line
. Long Distance Rates
. Access Charges / Reciprocal Compensation
. Market Penetration
McLeodUSA logo. . . . but stability in local market
Slide 25
Cornerstone #2 . . .
[Centered on the slide are two pie charts side by side. On the left is a pie
chart representing "Operating Capital (2) $475", "High Yield Debt $725", and
"Cash $600". Above the pie chart is the text "Sources (1) $1.8B". Below the
pie chart is the text "(1) Excludes $725M Available Credit Facility, (2) EBITDA
net of interest and working capital". On the right is a pie chart representing
"2001 $1.0B", "2002 $450" and "4Q00 $350" Above the pie chart is the text "Uses
$1.8B". Below and to the right of the pie chart is the text "*As of 9/30/00".
Centered above both pie charts is the text "4Q00 - 2002E".
McLeodUSA logo. . . . funded to free cash flow 2002
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Slide 26
Cornerstone #3...
1996 2000(e)
---- -------
Revenue Drivers:
. CLEC Sales Headcount 192 1,450
. CLEC States Served 2 25
. Total Revenue/Employee $65k $155k
CAPEX/Margin Drivers:
. Switches (Voice & Data) 1 440
. Fiber Miles 2,300 24,500
. Total Gross Margin 35% 46%
SG&A Drivers:
. Total SG&A/Revenue 57% 39%
. Business Churn (CLEC) 0.5% 0.5%
. Sales/Total Headcount (CLEC) 9% 22%
McLeodUSA logo. . . . predictable, staged execution
Slide 27
Summary . . .
. Viability of business plan
. Funding status
. Predictability/reliability
McLeodUSA logo. . . . the foundation of our success
Slide 28
Large McLeodUSA logo.
Clark McLeod
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Slide 29
McLeodUSA, Great Timing . . .
[Three circles overlapping in part each of the other two circles. The text
"People" is printed in the top circle; the text "Capital" is printed in the
lower right circle; the text "'Execution" is printed in the lower left circle;
and the text "Sustainable Levered Assets" is printed in the center of where the
three circles overlap. To the right of the circles is the following text:]
. Team - Industry Leader
. Execution - Scalable & Replicable
. Financing - Funded
McLeodUSA logo. . . . positioned for the opportunity
Slide 30
Safe Harbor . . .
Some of the statements contained in this slide presentation discuss future
expectations, contain projections of results of operations or financial
condition or state other forward-looking information. Those statements are
subject to known and unknown risks, uncertainties and other factors that could
cause the actual results to differ materially from those contemplated by the
statements. The "forward-looking" information is based on various factors and
was derived using numerous assumptions. Important factors that could cause
actual events or results to be materially different from the forward-looking
statements include availability of financing and regulatory approvals, the
number of potential customers in a target market, the existence of strategic
alliances or relationships, our developments in the industry, changes in the
competitive climate in which we operate and the emergence of future
opportunities. These and other applicable risks are summarized under "Risk
Factors" in the McLeodUSA 424B Prospectus Supplement filed with the Securities
and Exchange Commission on January 4, 2001.
McLeodUSA logo.
Slide 31
Large McLeodUSA logo.
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